BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 9:00 a.m. on November 30, 2009, in Suite 801 of The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to approve the equivalent of one well per 10 acres for Section 15, Township 7 South, Range 94 West, 6^th  P.M., for the production of gas and associated hydrocarbons from the Iles Formation.

FINDINGS

The Commission finds as follows:

1.    Williams Production RMT Company (“Williams”), as applicant herein, is an interested party in the subject matter of the above‑referenced hearing.

2.    Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

3.    The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order pursuant to the Oil and Gas Conservation Act.

4.    Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply. Section 15, Township 7 South, Range 94 West, 6^th P.M. is subject to this Rule for the Williams Fork and Iles Formations.

5.    On March 31, 2008, the Commission issued Order No. 139-85, which among other things, allowed the equivalent of one well per 10 acres, with the permitted well to be located no closer than 100 feet from the outside boundary for certain lands, including Section 15, Township 7 South, Range 94 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Williams Fork Formation.

6.    On June 29, 2009, Williams, by its attorney, filed with the Commission a verified application to:  (1) establish an approximate 640-acre drilling and spacing unit, consisting of Section 15, Township 7 South, Range 94 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, (2) continue to allow the equivalent of one well per 10 acres for said Section 15, for the production of gas and associated hydrocarbons from the Williams Fork Formation, and (3) allow the equivalent of one well per 10 acres for said Section 15, for the production of gas and associated hydrocarbons from the Iles Formation, with recommended setbacks no closer than 100 feet from the boundaries of any unit or lease line for all future Williams Fork and Iles Formation wells.

7.    On August 6, 2009, Williams, by its attorney, filed with the Commission a written request to approve the application based on the merits of the verified application and the supporting exhibits as is provided for by Rule 511.  Sworn written testimony and exhibits were submitted in support of the application.

8.    On August 11, 2009, the Bureau of Land Management (“BLM”) filed a Protest to the application. Consequently, on August 13, 2009, Williams, by its attorney, requested a continuance of this matter until the September Commission hearing.

9.    On August 28, 2009, Williams Production RMT Company (“Williams”), by its attorney, filed with the Commission a verified amended application which limited its prayer for relief to allow the equivalent of one well per 10 acres for Section 15, Township 7 South, Range 94 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Iles Formation, and requested a continuance on the amended application until the November Commission hearing.

All future Iles Formation wells to be drilled upon the application lands should be located downhole anywhere within a given drilling unit but no closer than 100 feet from the boundary or boundaries of the lease line without exception being granted by the Director of the Oil and Gas Conservation Commission. It is provided, however, that in cases where a drilling and spacing unit of the application lands abuts or corners lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Iles Formation wells, the well should be located downhole no closer than 200 feet from the boundary or boundaries of the lease line so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.

That, except as previously authorized by order of the Commission, wells to be drilled under this application should be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto) unless exception is granted by the Director of the Oil and Gas Conservation Commission pursuant to application made for such exception.

10.  Testimony and exhibits submitted in support of the application showed that Williams is a leasehold owner of the application lands, and that the Williams Fork and Iles Formations underlying the application lands are presently unspaced and undrilled.  Additional testimony showed that the application lands are contiguous to lands which have been approved for 10-acre well density drilling for both the Williams Fork and Iles Formations under Order Nos. 139-99 and 440-54, and that it is requested that the Commission take administrative notice of the testimony and exhibits supporting the applications resulting in the entry of Order Nos. 139-99 and 440-54 in support of this application.  Further testimony indicated that Williams has focused their efforts on development of the Williams Fork Formation in the vicinity of the application lands, however, does now recognize the potential in developing the Iles Formation on dual completion with the Williams Fork Formation.

11. The above-referenced testimony and exhibits show that the proposed well density will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.

12.  Williams Production RMT Company agreed to be bound by oral order of the Commission. 

13.  Based on the facts stated in the verified application, having received one protest which was subsequently withdrawn, and based on the Hearing Officer review of the application under Rule 511., the Commission should enter an order to approve the equivalent of one well per 10 acres for Section 15, Township 7 South, Range 94 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Iles Formation.

ORDER

                        NOW, THEREFORE IT IS ORDERED, that:  (1) the equivalent of one well per 10 acres is hereby approved for Section 15, Township 7 South, Range 94 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Iles Formation, and (2) the equivalent of one well per 10 acres continues to be approved for said Section 15, for the production of gas and associated hydrocarbons from the Williams Fork Formation.

IT IS FURTHER ORDERED, that all future Williams Fork Formation and Iles Formation wells to be drilled upon the application lands shall be located downhole anywhere within a given drilling unit but no closer than 100 feet from the boundary or boundaries of any unit or lease line without exception being granted by the Director of the Oil and Gas Conservation Commission.  It is provided, however, that in cases where any unit or lease line of the application lands abuts or corners lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation and Iles Formation wells, the well shall be located downhole no closer than 200 feet from the boundary or boundaries of the unit  or lease line so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission.

IT IS FURTHER ORDERED, that except as previously authorized by order of the Commission, wells to be drilled under this application shall be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto) unless exception is granted by the Director of the Oil and Gas Conservation Commission pursuant to application made for such exception.

IT IS FURTHER ORDERED, that the provisions contained in the above order, shall become effective forthwith.

                        IT IS FURTHER ORDERED, that the Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

                        IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this order to be final agency action for purposes of judicial review within thirty (30) days after the date this order is mailed by the Commission.

                        IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this order is not required prior to the filing for judicial review.

                        ENTERED this__________day of December, 2009, as of November 30, 2009.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                             OF THE STATE OF COLORADO

                                                                        By                                                                       

                                                                                    Robert A. Willis, Acting Secretary

Dated at Suite 801                                                                                                  

1120 Lincoln Street                                    

Denver, Colorado 80203                           

December 7, 2009